DISPUTES IN THE CONSTRUCTION SECTOR

CD: Reflecting on the last 12 months or so, how would you describe the level and intensity of disputes in the construction sector? Are any sector-specific challenges reverberating through the construction industry to cause friction and commercial conflict?

Appelbe: In 2017 and the preceding years there were many new enquiries, primarily arising from international arbitration in the oil and gas and transportation sectors. The level of oil and gas enquiries has slowed again during the first quarter of 2018. There may be a link between an increase in recent settlements and the steady oil price recovery since the 2014 price drop. Algeria, a not-infrequent user of construction arbitration, is in the process of settling many of its biggest energy infrastructure disputes amicably to reinstate an investor-friendly atmosphere in the country. We are seeing a high proportion of cases related to projects in the Middle East, where there continues to be diverging views on the cost and time effect of change. We have seen a significant number of large complex disputes in the last 12 to 24 months involving sums in dispute over $100m. Enquiries in relation to disputes between employers and the designer or project manager have been coming in more frequently than historically. It is not clear what is driving this. It may be that companies are less able or willing to allow their professional suppliers’ contribution to an underperforming project to go unchallenged.